Housing Energy Efficiency and the Horizon Effect

Ran Gu (), EglÄ— JakuÄ ionytÄ— () and Swapnil Singh ()
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Ran Gu: University of Essex and Institute for Fiscal Studies
EglÄ— JakuÄ ionytÄ—: Lietuvos Bankas (Bank of Lithuania) and Vilnius University
Swapnil Singh: Lietuvos Bankas (Bank of Lithuania) and Kaunas University of Technology

No 43, Bank of Lithuania Discussion Paper Series from Bank of Lithuania

Abstract: This paper examines howthe investment horizon effect influences energy-efficiency investments, showing that older individuals have lower incentives to invest in energy efficiency. Using detailed microdata from England, we document that properties occupied by older households are systematically less energy efficient. We develop a two-period model where households make energyefficiency investment decisions under mortality risk, generating predictions about both individual and neighborhood-level investment patterns. Testing these predictions using historical instruments for neighborhood age structure, we find that a one-year increase in neighborhood mean age causes a 0.7 percentage point increase in energy inefficiency.

Keywords: household balance sheet; inflation; fiscal policy; interest rates; household consumption (search for similar items in EconPapers)
JEL-codes: D14 J14 Q40 Q48 R31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2025-07-03
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